Update:
TLDR: It turned out to be Child Abuse that was occurring. Also interviewed by Police and the end result is if you EVER even suspect that a child is being abused, YOU REPORT IT. It doesn't matter all the other things, end thing is YOU REPORT IT and if you do NOT you may actually be also able to be CHARGED WITH A CRIME.
So, I did not go to the police. However, as I stated or at least inferred, the language and statements they hurled towards us could be strongly construed as committing a crime in and of itself. It was VERY abusive towards us, much less their children.
So, one of the other players went home and told their parents who in turn called the police. They went in for a check (not sure on what happened exactly, as this was second hand from the player that reported it). They found out that the older kid actually WAS kicked out of the home by that point and then did a wellness check on the younger child. In essence, he was one BIG bruise underneath his clothes, he had been beaten black and blue.
My part comes in at which the police wanted to ask me some questions about what happened. They were surprised that NONE of the adults had reported anything. I don't think they are going to charge me, but they did inform me that in these situations when there are minors and we suspect something like this we are supposed to report things like this, and if we do not, in some cases we can be seen as accessories or other such things.
Anyways, the end game is that I should have reported it, not even asked for advice, simply reported the situation. I report it, I don't need to do anything else. The police at that point can determine the right course of action, whether it is a false alarm, or something to be concerned about.
In this instance, where there was smoke, there really was fire and I actually feel pretty bad for not acting on my initial instinct.
Also, a thought on property now that this has happened, when parents take something from a child, if it is NOT something they themselves have bought, and do it for no good reason, it could fall under the term of abuse. If nothing else, emotional abuse.
With the advise given in this thread which now goes counter to what the cops told me, I wonder how many who had their parents treat them so actually had a form of abuse on them, but as we love our parents and try to frame them in the best light, try to ignore or excuse it rather than seeing it as abuse.
These players NEVER raised any thing against their parents or gave us really that many indications of what was going on prior to the game session which this all went down. Later, (and I haven't seen them since, just the second hand account from the other player of ours and the police questioning of me) we saw this one thing, and though I felt I should take some sort of action, interestingly no one said anything.
What this does tell me is that this was pretty serious, and the ability for us to write it off may show how things in our own lives have dulled our sense of what is abuse or not or the actions we should take. Or maybe it is because sometimes we feel the best action is to NOT get involved.
Anyways, as there were multiple adults there and around the area, I don't think (or at least hope) that any of us are going to be charged as accessories or simply going along with a crime that occurred in front of us. Still rather shaken to a little degree by all of it. However, I've learned my lesson on the correct action I should have done, which was report it and leave the rest up to those who handle these things and have a lot more experience with them on what to do next.